Fergie forced to close US business as debts pile up

The Duchess of York has been forced to close her US-based lifestyle and promotions business amid mounting debts.

Sarah Ferguson, who faced millions of pounds of debt after divorcing Prince Andrew in 1996, has shut down her New York-based business Hartmoor LLC after it lost $US2 million ($A2.3 million) in three years.

The News of the World newspaper reported the duchess had fallen out with her main business partner, US multi-millionaire investment banker Todd Morley, and had to take out a $US1 million ($A1.15 million) loan to pay off Hartmoor's debts.

The duchess and Morley refused to file for bankruptcy for fear such a move would cause them embarrassment, the paper added.

"Sarah is in a huge money mess," a source close to the duchess told the newspaper.

"It's a huge setback and she is very upset.

"She is trying to keep her spirits up, but she knows she faces a lot of work to recoup her losses.

"But she is a fighter. She had debts before and bounced back. She can do it again."